Arif Habib Group seeks new post-crisis identity

KARACHI: At the height of the financial crisis of 2008, it looked as though the Arif Habib Group may not survive, haemorrhaging billions of rupees and taking severe hits on its balance sheet. Yet two years on, the group seems to have successfully turned around, although with a dramatically different identity.

Arif Habib started off as a purely capital markets firm, originating as Arif Habib Securities, a brokerage firm that was first incorporated in 1994 though the group had been engaged in the brokerage business since 1970. The company has since evolved to become the group holding company with Arif Habib Ltd taking over the investment banking and brokerage arms of the conglomerate.

At its peak in late 2007, the Arif Habib Group was one of Pakistan’s largest financial services conglomerate. It owned one of the largest asset management companies, one of the largest investment banks, a large securities brokerage firm and a budding retail banking presence. Of these, only the investment bank and brokerage firm remain within the Arif Habib Group umbrella today.

Arif Habib Bank, which had acquired Rupali Bank in 2006, was bought out by Suroor Investments, a Middle Eastern investment group owned by Nasir Luta, for Rs2.7 billion ($32.5 million) in early 2009. The bank is in the process of being merged with Atlas Bank and Mybank and renamed Summit Bank.

An agreement was reached earlier this year to merge Arif Habib Investments, the asset management arm of the group, with MCB Asset Management, a wholly-owned subsidiary of MCB Bank. The Arif Habib Group will likely retain a stake in the firm but will no longer be its dominant shareholder.

Having jettisoned a significant portion of their financial services portfolio, the Arif Habib Group seems set to expand what had hitherto seemed to be less significant ventures. The group owns stakes in companies engaged in the manufacture of fertilisers, cement and steel. In addition, the company owns dairy farms as well as an alternative energy firm focused on wind power.

In two years, the firm’s profile shifted from being one of the country’s leading financial services conglomerates to one of the leading industrial groups that happens to own its own investment bank. It recently announced that it plans to change its name, from Arif Habib Securities to Arif Habib Corporation, a change reminiscent of a similar identity shift sought by Engro Corporation earlier this year.

Having an investment bank as part of the group has served the company well of late. The initial public offering of Fatima Fertilisers, one of their portfolio firms, was hugely successful, raising over Rs2 billion ($23.3 million).

The focus of the group seems to have shifted. Over the past week, the group announced that it would be pouring in Rs7.35 billion ($85.5 million) in equity injections into its cement, fertiliser and steel producing subsidiaries. It would also be providing Rs2.35 billion ($27.3 million) in credit lines to those same firms to help maintain and expand their production capacities.

Sources inside Arif Habib Group, however, emphasise the group has merely expanded its existing industrial units while retaining its core capital markets business. One insider pointed out that Arif Habib Ltd is still the largest securities brokerage firm in the country.

Published in The Express Tribune, September 9^th, 2010.